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WASHINGTON — President Bush enters a new phase of government-by-minority this month, issuing a veto certain to draw the first override of his presidency, and testing even his most loyal allies' limits on spending issues that will dominate the fall agenda.

The strategy allows Bush to employ every ounce of his presidential powers, imposing his will so long as he is backed by one-third of either house in Congress — the minimum to sustain a presidential veto. But it could strain his relations with GOP lawmakers as he pushes his tax-and-spending dogma beyond points that even a third of the House or Senate can accept.

Bush's growing use of the veto, combined with his continued embrace of executive orders and "signing statements," signal his willingness to defy large portions of Congress and the public to shape policies in his final year in office.

"I think what he's trying to do is recast his presidency, after the '06 elections, on spending," said Sen. Lindsey Graham, R-S.C., a Bush ally on most issues.

Little recourseDemocrats view the tactic as a hollow, deathbed conversion to spending concerns and a stubbornness that will haunt the GOP in the 2008 elections. They grudgingly acknowledge, however, that there is little they can do to force the president's hand on Iraq, domestic spending and other issues for the next 14 months.

"He may decide that all he wants to do is veto and stop progress," said Rep. Rahm Emanuel of Illinois, head of the House Democratic Caucus. "But everybody will know who wants to change things, and who wants to keep them just the way they are."

Until last week, Bush used the veto sparingly, applying it only when congressional conservatives were sure to prevent an override. That changed Friday, when he vetoed a water projects bill popular with lawmakers in both parties.

House and Senate GOP leaders made it clear to Bush that both chambers would muster the two-thirds majorities needed to hand him his first veto override, possibly this week.

More significantly, Bush seemed to push beyond his core of supporters by pledging to veto any measure that includes a tax increase. That could lead to the awkward scene of a large number of congressional Republicans voting to override his veto of a high-profile bid to expand the State Children's Health Insurance Program.

Veto-proof SCHIP?So far, most House Republicans have sustained Bush's veto because they share his objection to participation in the program by adults, illegal immigrants and middle-income families. But the president signaled he will veto a revised bill if it continues to be funded by a proposed tobacco tax increase.

That's a provision many House Republicans have agreed to swallow. The tax question is so settled that it isn't even discussed by House-Senate negotiators trying to craft a veto-proof bill, GOP leaders said.

Bush's hard-line stand puts those leaders in a tough spot. While eager to stay loyal, they realize that proposed changes to the health program's eligibility rules might attract enough Republican votes to override another veto.

House Minority Leader John Boehner and Minority Whip Roy Blunt headed successful efforts to sustain Bush's veto last month. But now they are working with negotiators to cut the best deal possible.

The two leaders may not vote for the compromise, Blunt said in an interview. But they want a bill that will win over a significant number of GOP members, not just the bare minimum that Democrats have sought.

If lawmakers can agree on a veto-proof version of the children's health bill, it would mark a rare legislative defeat for Bush on a major issue. But legislators think he will still be able to block Democratic-backed bills — such as one to fund health, labor and education programs — that he considers too costly.

Gone too far?And the president's ability to slap down congressional efforts to redirect the Iraq war seems undiminished, to Democrats' deep frustration.

"He has his loyal Republicans standing by him," said Senate Majority Whip Richard Durbin, D-Ill. "That may become a more uncomfortable position as time goes on."

A signing statement is controversial tool in which the president signs a bill into law but notes portions he will ignore. One recent report found that Bush has issued at least 151 statements challenging 1,149 provisions in laws.

Bush has increased his use of executive orders, which ranged from restrictions on striped bass fishing to sanctions against Myanmar's government. White House spokesman Scott Stanzel said Friday the administration "will continue to look for ways to make progress" on Bush initiatives that Congress rejects or ignores.

A leading contender to succeed Bush says the administration has gone too far.

"I will conduct a very serious review of how the Bush-Cheney administration has grabbed power," Sen. Hillary Clinton, D-N.Y., said in a recent campaign speech. "They have ignored checks and balances," she said. "They have disregarded the separation of powers."

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